Learn about Life in the 1920s


THE MERE MILLIONAIRE IS BECOMING almost an inconspicuous figure in the business world here, reflect a number of newspaper writers who have been perusing the figures recently sent out by the Treasury Department.

We have at least one authentic billionaire and ten corporations certainly in the billion-dollar class, and now along come the income-tax figures to show us that in 1925 there were 207 Americans whose income for the year was more than a million dollars apiece. Why, comments the Albany Knickerbocker Press, a millionaire to-day is a "poor man." "This nation has definitely become a land of multi-millionaires," reports a United Press dispatch from Washington. Million-dollar incomes for 1925 reported in 1926 were 207, a record figure, being one more than the number in the great war-profits year of 1916, and 132 more than in 1924. And there are plenty of other multi-millionaires that we don't know about, it is noted in the New York Telegram, because of their huge investments in tax-exempt securities, or because the bulk of their fortunes is invested in jewels or works of art. One conclusion reached widely is, as stated in the Chicago Tribune, that "industrial prosperity soared to its highest peak in history in 1925, with the possible exception of 1926." Whether prosperity was properly passed around, or was unduly concentrated in the millionaire class is a question upon which editors differ, as will be noted in a following paragraph.

In the meantime let us turn to one of the dispatches which reports the Treasury's facts about the growing membership of the American multi-millionaire club. The diagram at the top of the page shows graphically comparison between one year and another in this respect. In another direction the Internal Revenue report on returns filed in 1926 shows, according to the Washington correspondent of the Providence Journal, "with remarkable clarity how the Federal tax burden has been lifted from the lower and middle classifications." As restated by this correspondent, Mr. Ashmun Brown:

"Up to September 1, last, 3,953,976 individual returns had been filed for 1925 earnings. This is a reduction of 3,415,812 from the 7,369,788 returns for 1924 income. In other words, the latest tax-reduction has almost cut in half the number of individuals required to make returns, and it must be borne in mind that a vast number of the returns produce no taxes whatever.

"Another comparison is interesting. The aggregate net income reported in the 3,953,976 individual returns for 1925 was $21,189,850,118. Now the 7,369,788 returns for 1924 told of aggregate incomes of only $4,466,303,336 more than that. That is, the number of returns decreased 46.35 per cent., but the aggregate income decreased only 17.41 per cent. Nevertheless, the lesser number of returns in 1925 produced $27,111,801, or 3.85 per cent., more tax revenue. That illustrates the manner in which capital is coming out from the tax-exempt investments and, under the encouragement of lower tax rates, going after the higher profits."

The new Under-Secretary of the Treasury, Mr. Ogden Mills, points out that the total net income reported in 1926 was slightly smaller than that reported the preceding year—

"Yet, in spite of this reduction, and in spite of lower tax rates, the tax collected was about 6 per cent. greater. The reason for this incongruity is that the large decrease in the number of taxable incomes was confined to those with net incomes of less than $5,000, while the number of those with net incomes in excess of $5,000 increased.

"According to these preliminary returns, for the income year 1925, .29 of 1 per cent. of the population pay over 95 per cent. of the individual income tax; 17 per cent. pay less than 5 per cent. of the tax, and the remaining 82 per cent. pay no income tax.

"If we study the sources of income they clearly show that the principal tax-reduction effected by the act of 1926 was on income from wages and salaries. Wages and salaries returned for 1925 were $4,400,000,000 less; the returns from business and partnerships about $970,000,000 less; from rents and royalties over $185,000,000 less; from interest and investments over $485,000,000 less. On the other hand, income derived from the sale of property of all kinds increased $860,000.000; from capital gains, $549,000,000, and from dividends over $164,000,000."

The 207 million-dollar returns for 1925 are classified in the New York Herald Tribune's summary of the report as follows:

"One hundred and four with incomes between $1,000,000 and $1,500,000. Forty-three with incomes between $1,500,000 and $2,000,000. Twenty-nine with incomes between $2,000,000 and $3,000,000. Fifteen with incomes between $3,000,000 and $4,000,000. Nine with incomes between $4,000,000 and $5,000,000. Seven with incomes of $5,000,000 and over."

Who these fortunate mortals are can only be guessed at, but the fact that the returns for the previous year were made public helps the guessers. The New York World's Washington correspondent places the two Fords and the younger Rockefeller at the head of the list, with Secretary Mellon and his brother, and Payne Whitney, F. W. Vanderbilt, George F. Baker, Thomas F. Ryan, Vincent Astor, and J. P. Morgan presumably included.

Now we must not think that "the rich are growing richer and the poor are growing poorer, and this country is going to the ding-dong bow-wows," declares the Philadelphia Bulletin. And the Boston Globe agrees, believing that it is safe "to assume that the rich are growing richer and the poor are doing a little better." Discovering from the income-tax figures that one person in fifteen belongs to a family with an income over $5,000, the Troy Record can not help asking: "Has there ever been a country in the world in any age where the comforts of life have been so broadly possest? " And going a little further and taking account of exemptions, the New York State paper concludes that married people with $3,500 or more and bachelor men and maids with $1,000 a year represent "from 15,000,000 to 20,000,000 Americans; in other words, a sixth of the people of the United States."

But "unprecedented prosperity for these 207 Americans" does not necessarily mean national prosperity, argues the New York Evening World:

"The fact that a fraction of 1 per cent. pays 95 per cent. of the income tax is startling enough. This means that a fraction of 1 per cent. makes the greater part of the profits, and that does not indicate a healthy prosperity for the nation.

"Nor does the fact that 82 per cent. do not make enough to pay any income tax, mean national prosperity."

Source: The Literary Digest for April 16, 1927